Higher Education Reform

College is thought to provide opportunities for graduates not available to those not pursuing higher education. However, the increases in the price of college and the decline in wages for those with degrees are making people question the importance of college and if it really is worth the investment.

Mary Beth Marklein argues that a college degree is still worth the investment. One point was that college graduates, whether they earn a bachelor’s degree or an associates degree, will still tend to earn more money over their lifetime versus those who do not go to college, information found based on 4 decades of analysis. And even though wages have declined for those who have earned college degrees, they have also declined for those who did not receive a college education, and the gap between the two is still at an all time high, with those people who earned college degrees earning much more money in their occupations.

Another point made was that even though student loan debt has soared by the end of 2013, a federal reserve study on data of wages for ages 16-64 for those without a degree, with an associates, and with a bachelors had shown that those with a bachelors degree have kept a return on investment of 15%, where 7% return is sound. This proves that even with student debt rising, the return on investment proves the investment is definitely worth it. Majors were also found to play a role on the returns of investment, where some majors can earn a return of 21%.

Some facts stated in the article were that over 4 decades, a bachelors degree will earn an average of about 56% more than a high school diploma and an associates will earn 21% more. However, studies have shown that the earnings of bachelors and associates degrees over high school diplomas has decreased from where they were in the years 1982-2001 to 2001-2013. Along with this statistic, the wages have declined over these same time spans. So the question is, even though those with a bachelors or associates degree do tend to make more money, is this decline in wage and earnings a permanent reversal in the demand of college graduate’s skills, or is it just a phase that will pass?

Oregon proposed a program that would allow students to attend state colleges tuition free. This proposal, called the “Pay It Forward, Pay It Back” program would have students go through their higher education without the stress of taking out loans and racking up a lot of interest and massive debt. They would do this by paying the state back a small portion of their income over the course of about 20 to 25 years. After graduating, the student would pay 0.75% of their yearly income per year of schooling. This means a 4 year student would end up paying 3% interest for the time that they are paying. This interest would be put into a trust fund that would help other students in the future.

There are some problems with this proposed plan. One problem is the massive cost that the states would have to pay to start this program. Washington looked into the feasibility of this plan for their state and determined that it could cost as much as 1.4 billion dollars a year. Also, because the payment plan is based on the income of the students after they graduate, it may drive the top students away from state schools if they believe that a portion of their possibly higher income will be taken away from them over the next 20-25 years.

Although this plan is not perfect, it may be a step in the right direction to help students pay for their education without amassing a large amount of debt.

September 9th is the day that US News and World Report the rankings for “America’s Best Colleges.” This ranking is a way for schools to measure themselves on how they compare to the other elite colleges. The problem is that this ranking is based off of what US News defines as ‘best’. Their ranking focuses on the individuals these schools let in and not what the students leave with after their time in college. The ranking is based heavily off of what percentage of students get in and what their average SAT score is. With this being said, the easiest ways for a school to better their rank is to “raise SAT benchmarks” and to reject more applicants.

On the other side of things, Times has released their own rankings and do not focus on a school’s prestige but instead on “economic diversity.” They started off by selecting colleges with a four-year graduation rate over 75%. This alone is only 98 four-year colleges out of 3,100 in the country. The rest of the ranking was determined by the “percentage of students who received a Pell grant and the net price of attendance.”

The need for schools to climb the rankings “may pay off for colleges” but in the long run hurts the students and their families. In the end, neither of these rankings do students any justice. They may determine which college has the best incoming students but that does not show if they have taught their students anything while at school. Ranking colleges will do “little to expand educational opportunity” for the majority of students whose school is not on either list.

When it comes to the costs of higher education, one thing everyone can agree with is that it is getting out of hand. In the last year tuition and fees have increased 8.3%, which more than doubled the rate of inflation. This increase was not a surprise. It followed the trend of increasing tuition costs that has been occurring for the last decade at an average rate of 5.6%. On top of the high costs, a college degree has become a necessity to obtain a decent career. The only solution for students has become borrowing. The federal government is lending over $100 billion dollars a year to students. Private loans on top of that have left many graduates unable to keep up.

Kevin Carey, a director of Education Sector, a think tank in Washington D.C, compares entering college to getting smuggled across the border. He says “you can get to the promised land if you try hard enough, but you arrive in a state of indentured servitude to the shady operators who overcharged you for the trip.” The image he portrays of the costs of higher education is dark and striking, but realistic. Carey acknowledges the hard work the government is putting in trying to mitigate costs, but doesn’t see it as progress when the tuition fees are still increasing astronomically.

The problem is obvious, but the solutions are vague. Carey sees the high costs as an “inevitable consequence of the way higher education system is currently design.” The system is broken and “static.” It is not changing and developing with the needs of the time. Most higher education institutions are founded in their old ways and traditions. They do not desire to change. Carey believes the government needs to threaten the institutions for reformation to ever occur. The institutions are benefiting themselves when they need to put students and public interest first.

Pennsylvania State Senator Andy Dinniman recently wrote a column discussing the difficulties faced by the Commonwealth’s State System of Higher Education. He stated that fiscal and demographic problems in the state will have to be resolved or the system will collapse.

At the Senate Appropriations hearing, the State System Chancellor explained that the system needs $61 million more than the governor budgeted and will certainly have a 3 percent tuition increase and even more if that money is not provided.

He stresses that the PA Constitution requires that the first legislative budget obligation is to fund the k-12 public schools, and that every dollar taken away from k-12 will increase local schools property taxes.

About three years ago, after the first budget cuts, Gov. Corbett appointed an Advisory Commission on Higher Education. A year later, their report was issued. That report lays gathering dust on endless desks in Harrisburg because no one wants to deal with fiscal demographic and change realities.

The report bluntly stated: “In recognition of an overall decline in the rate of growth of post secondary institutions, competition for funding, potential duplication of services and geographically underserved areas, efforts must be focused on the efficient and effective delivery of services and the sustainability of our post secondary system into the future.”

Legislation in the Pennsylvania legislature will allow several Pennsylvania public colleges to pull out of the 14 university system of higher education. Supporters of the bill say it would strengthen the state system by allowing its best universities to leave while those who oppose it say it would hurt the system because it would result in increased tution and weakened faculty unions. Many trustees and lawmakers are pushing for this bill to be approved. The bill would allow PASSHE’s best off institutions, those with over 7,000 students and good financials, to become “state-related” versus “state-owned”. The epicenter for support is West Chester University.

The sheer fact that this kinds of rash actions are on the minds of lawmakers and trustees shows the failures of the state-school system as a whole. The belief is that leaders at privatized universities will be able to run a higher education system better than the government.

CSCubed is preparing for AICUP Student Lobby Day in Harrisburg on April 1. Our primary goal is to convince legislators to commit funding to a new PHEAA grant program that helps middle class students pay for college. Leading up to Lobby Day we’ll be providing more information as to why this new grant program is so important.

AICUP research provides the following information:

The middle class is hit hardest by student debt because they are not wealthy enough to pay for education out of pocket and not poor enough to qualify for programs like Pell Grants. Consequently the new middle income PHEAA grants that CSCubed supports will help a population that has the most student loan debt of any income category.